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RETAIL BANKING | Staff Reporter, China
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Chinese megabanks extend profit decline as credit boom fades

Shanghai- and Shenzhen-listed banks are likely to see 6.7% increase in profit.

Chinese megabanks are poised to post single-digit profit growth for the fifth consecutive year in 2018 in line with the slowdown in the world’s second largest economy, reports South China Morning Post. 

Also readChinese banks struggle to strike balance between curbing risk and lending

The earnings of banks traded on the Shanghai and Shenzhen bourses are likely to rise 6.7% YoY in 2018, according to a forecast from Ping An Securities. This represents a sharp decline when banks in the Mainland reported annualised profit gains of 49% in the decade between 2003-2013 amidst the country’s debt binge.

“[T]hey mainly relied on a credit boom to achieve profit increases,” Wang Fang, chairman of Ye Lang Capital told SCMP. “The stable performance was still a result of easy credit, rather than better financial services.”

Also readChinese banks raise record-high $48b in Q1 to plug capital crunch

Cracks are already showing in the country’s bond and credit market as delinquencies rose to a record $17.88b (RMB119.6b) in January as credit-starved corporates failed to repay their debts amidst the liquidity crunch, according to an earlier note from DBS.

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